3 Reasons Invoice Finance is Better for Your Business than an Overdraft.
The need for fast cash can come at any time in business. At start-up, when your business plateaus and you need to rev it up, or just when too many bills arrive all at once.
Although your business might look profitable on paper, getting your hands on fast money isn’t always easy, and that has a damaging effect on cash-flow and security.
You have two immediate choices when you need money fast; seek a bank overdraft or consider invoice finance.
Here are three key reasons that we believe that in most cases, invoice finance is your best choice.
Self-liquidating
Invoice Money’s invoice finance facilities are flexible, user friendly and self-liquidating which means they are paid back when each invoice gets paid. You are not left carrying a financial load that holds you back. By choosing to finance your accounts receivable from your most credit worthy customers, you can relax, knowing that the invoice will be paid and your invoice finance arrangement will end. This means you can have a ready supply of cash whenever you need it, quickly and without fuss.
You’re not out-of-pocket
If you choose a bank overdraft, you are taking out a line of credit from your bank. You are entering into a debt arrangement that usually attracts high fees including interest and sometimes a bank service fee, too. An overdraft is an open-ended arrangement, so there is no set due date for repayment, which makes it all too easy to leave the debt owing and the interest rising, while you look the other way.
Because of the highly transactional nature of an invoice finance arrangement, the funds we advance to our clients are repaid by the customer settling their invoice.
This means that you, as our client, never have to repay the advance provided that your customer pays the invoice in a reasonable time. The amount you would owe us for the invoice advance is cleared (liquidated) by your customer on paying the bill.
Once that has happened, and assuming the invoice was paid in a reasonable time to prevent excessive fees accruing, there is no further amount owing.
Your assets are not at risk
Because your invoice finance will be covered when your customer pays the outstanding account, your business is not taking on any additional debt. Unlike an overdraft, we do not take your family home as security! Your assets are not at risk should something go wrong.